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Child and Dependent Care Credit: Who qualifies for up to $2,100 in tax credit and how to claim it

There is a tax credit that can be applied for by people paying for childcare while they are in work or looking for work though the tax season has ended.

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The Child and Dependent Care Credit is designed to ease the burden of childcare for working people. If you have to pay to ensure a child or dependent is looked after while you are at work, you will most likely be able to claim the credit.

The credit can cover up to 35% of work-related care expenses with the lowest amount offered standing at 20% of care costs. The upper limit of the cost covered is $3,000 for one qualifying person or $6,000 for two or more qualifying persons.

Here are the eligibility criteria:

  • The care must be provided for a “qualifying person,” who is either:
    • A child under the age of 13 whom you claim as a dependent on your tax return.
    • A spouse or dependent who is physically or mentally incapable of self-care and who lived with you for more than half of the year.
  • You, and your spouse if you are married, must have earned income from work, self-employment, or a combination of the two.
  • The care must be provided by a qualifying person who is not your spouse, the parent of your qualifying person, or your dependent.
  • If your care expenses qualify, your credit may amount to up to $1,050 for one individual and up to $2,100 for two or more individuals for the 2022 tax year.

The percentage that can be claimed depends on your adjustic gross income (AGI). Claimants earning less than $15,000 qualify for the full 35%. This decreases by one percentage point for every $2,000 earned over this amount, culminating in people earning.over $41,000 being able to claim 20% of childcare costs.

It’s important to note that the Child and Dependent Care Credit is not refundable, meaning that if the credit exceeds your tax liability you will not receive a refund for the difference.

How to Claim the Child and Dependent Care Credit

You’ll need to complete Form 2441 and include it when you file your federal income taxes.

The tax season has already ended so unless you got an extension then you will need to wait until next year’s filing period.